The US National Debt

  1. GENIERE

    GENIERE 288
    Science Advisor

    The US has a national debt proportionally similar to that of France or Germany and about 50% of Japan’s. Some of the US debt is owed to its corporations and citizens while some of it is owed to foreign entities. China has a large trade surplus with the US and increasingly owns a goodly share of the US debt.

    China, by virtue of its low paid workforce, exports goods and services to the US that enhance the US citizen's standard of living. The US pays for the low priced products with the US dollar. The Chinese can distribute, save, or invest the dollars as they see fit.

    Some posters, the US haters such as TSM find much enjoyment in the fact that China owns a large amount of US debt. Why is the US debt seen as a negative for the US and a positive for China?

    In a high school economic class we might be taught that owing money is a bad thing. Is that really true?
    .
     
    Last edited: Oct 31, 2005
  2. jcsd
  3. Once you graduate however, you begin to discover that macro-economics states that an economy based on credit with a mounting deficit and little to back the economy means you are becoming a welfare state with a few rich bankers at the top.

    When the crash comes and you discover that like Halliburton they have salted thiir cash offshore, they bail and head for switzerland.
     
  4. Pengwuino

    Pengwuino 7,118
    Gold Member

    I wonder what professor would have told you "When the crash comes and you discover that like Halliburton they have salted thiir cash offshore, they bail and head for switzerland."

    Or did you get it off a blogs?
     
  5. not everyone here is a student

    Source please? since you are continuing to post spin and smoking mirrors (and it seems personal attacks now) I would like to see where you pulled your figures from...
     
  6. Pengwuino

    Pengwuino 7,118
    Gold Member

    Well then I guess he learned economics from a cartoon. No self-respecting economist would say a country is run by "a few rich bankers" or make that childish halliburton joke. Also, theres the baseless assumption that the US economy has nothing behind it.

    I can tell you for a fact that vs. GDP, the figures are wrong. I don't see what scale you can use where the US debt is lower then Japan or Germany or France. They are similar... roughly 10% higher then france and germany... but definitely not lower. Check the CIA World Factbook.
     
  7. :frown: I would have laughed, if it were not so sad.
     
  8. Penguine, maybe you are unaware but in the last couple of years the 'dollar standard' has been undermined.

    Most nations have divested and purchased 20%+ of their treasury holdings into Euros.

    In late January/early February of last year, South Korea published a poorly worded statement telling the world they were selling dollars and they started a world wide run on the currency. They had to publ9ish a retraction within 12 hours.

    I am certainly glad YOU think you are backed by something because the rest of the world has its doubts.
     
  9. russ_watters

    Staff: Mentor

    Please excuse the interruption, I'm just passing through, but I thought you guys might be interested in some facts:
    http://www.lightparty.com/Economic/RedInk.html

    http://www.sumeria.net/politics/debt.html

    China's debt: http://www.iwep.org.cn/wec/English/articles/2001_01/jiakang.htm

    There may have been some mixing of debt vs deficit there, guys.

    Proceed...
     
    Last edited: Nov 1, 2005
  10. Marc Rich anyone? So sorry that reality interferes with your theoretic economic jargon.
     
  11. Yeah and covering the years 1944 to 1988!?:rofl:

    Maybe he should just keep on PASSING through and not bother to stop next time.:biggrin:
     
  12. Any American ever heard about the Maastricht norm? All EU countries are required to keep deficit below 3 %
     
  13. GENIERE

    GENIERE 288
    Science Advisor

    Per the CIA World fact book (2004)

    Dept per GDP of some selected countries

    Japan - - - 164.3
    Italy - - - - 105.0
    Belgium - - 96.2
    France - - - 67.7
    Germany - -65.8
    USA - - - - - 65.0

    Statement made in original post is correct.

    TMS in a reply stated “Most nations have divested and purchased 20%+ of their treasury holdings into Euros.”

    The statement may or not be factual, but it doesn’t matter, it implies US dollars were sold. Who was the purchaser? Since there was a purchaser, there must be an active market vying for dollars. For many months, the Euro decreased in value relative to the Dollar. Did the countries selling the dollar do well for their citizens?


    ...
     
  14. GENIERE

    GENIERE 288
    Science Advisor

    Apparently that doesn't apply to France and Germany.
     
  15. :rofl: :rofl: :rofl: Still using your high school economics classes, eh?

    Who was the purchaser??? Why, the USA of course. Doh!!!

    Oh, and what is a 'dept'? You obviously have cut and pasted something and given no reference for it. If they are writing the word as 'dept' and not 'debt' you must be really reaching.

    And what is a 'dept per GDP' anyway while we're at it?

    Are these percentages, dollars, euros, donuts ... what?

    Maybe you'd letter let the grown-ups talk for a while.
     
  16. GENIERE

    GENIERE 288
    Science Advisor

     
    Last edited: Nov 2, 2005
  17.  
  18. GENIERE

    GENIERE 288
    Science Advisor

    I do wish that were true, but if memory serves, my last physics course would have been taken in1961+/-.

    Correct if stated “the world is not investing in the US over the last several years at the high historical rates.”

    China is continuing to buy US T-notes despite its non-parity (Yuan v. Dollar) policy.

    If we use the value of the Euro as a reference, the Dollar has increased in value since Jan. ’05. The value of the Yuan is supposedly maintained at 3% parity with the Dollar but in practice its value has closely tracked the Dollar. China, other nations, and private entities continue to invest in and stabilize the Dollar’s value v. the Euro and Yuan by buying Dollars. Capital flow into the US is still greater than outflow.

    http://money.cnn.com/2005/10/18/news/economy/inflows.reut/
    October 18, 2005: 10:42 AM EDT - WASHINGTON (Reuters) – “Net flows of capital into U.S. assets swelled to $91.3 billion in August, well above analyst expectations and the largest inflow since $92.1 billion seen in April 2004, a government report showed on Tuesday…The figure was more than enough to cover the U.S. trade deficit, which was $59 billion in that month, and topped …sending the euro to session lows around $1.1919 from around $1.1938 shortly before the report was released…”

    The effect of above on the Chinese internal economy is an inflationary one while tending to stabilize prices in the US.

    You have not yet addressed the question in my OP.


    ...
     
    Last edited: Nov 2, 2005
  19. edward

    edward 1,004
    Gold Member

    GDP relies heavily on personal consumption, The problem is that the cost of personal consumption is outpacing personal spendable income. We are buying on credit giving the GDP a boost, but consumer debt is not factored in to the equation. In essence we cannot keep up the present rate of personel consumption which has made the the GDP look good in recent years.

    http://www.financialsense.com/fsu/editorials/charting/2005/0218.html
     
    Last edited: Nov 2, 2005
  20. Forget it, edward.

    She has not understood yet the effects of a credit economy.

    She doesn't understand that the flawed view of economy as generated by the USA is actually selling the USA to the people investing in the USA.

    That investment is actually a loan with no way to repay it.

    It is said that if the UAE and Saudi haul their cash out of the US banks ... not the economy ... just the banks ... It can start off an economic collapse of the USA.

    Additional investment is actually in LAND not manufacturing.

    And now ... when companies bid on the Supposed free market for the purchase of even 'trivial' companies the Senate is stepping in to prevent it.
     
Know someone interested in this topic? Share a link to this question via email, Google+, Twitter, or Facebook

Have something to add?
: Debt